Finances and Taxes

Information on Laws Regarding Finances and Taxes For People with Swedish Background Living in the US

Presented by Madeleine Thunström

Currently, many changes are taking place in Europe, America and other parts of the world in regard to how companies, organizations and individuals are required to report their income, revenues, assets and financial transactions. Issues explored in this presentation include taxes, property,social benefits and more.

One person attending our breakfast meeting, Brita Adkins, had lost her voice, so I asked her if she would be willing to take notes and translate it into English for us. Ms. Adkinson did way more than I expected! I would hire her as my companion on ANY presentation I go to. I don’t think she left anything out. Thanks again Brita Adkinson for attending and translating!

A presentation explaining new finance regulations, by Madeleine Thunström, Swedish tax lawyer, Skandinaviska Enskilda Banken (SEB), was organized by Linda Ström, (www.Getswedish.com) in collaboration with Consulate of Sweden, Seattle; and Swedish American Chamber of Commerce, Seattle.

The presentation was shared with Swedish citizens in the Seattle area February 28, 2012

Summary of the information
This presentation focuses on

Dual citizenship

Preparation for moving from US to Sweden, from a Swedish perspective

Inheritance issues

Properties and other assets in Sweden and the responsibility of the individual

Regulations regarding financial advice

The new US Foreign Account Tax Compliance Act (FATCA) will come into effect July 1, 2013. This will change the way Swedish financial institutes are sharing and are able to provide services to Swedish citizens or people with dual citizenship living and working in the US.

The new law states that a financial advisor not based in the US is not permitted to assist US residents with financial advice regarding investments. Thus, a person living in
the US may not contact a Swedish bank or financial institution for advice, neither
through writing, email or telephone.

Internet banking

Commonly, Swedes living in the US retain a bank account and various assets in Sweden. They may use the Internet to access their bank account in Sweden, pay bills in Sweden
and carry out transactions, such as purchase or sales of shares; and transfer funds between a US account and a Swedish account; but they may not take advice regarding financial
investments.

Issues are on the rise about which countries accept dual citizenship with specific other countries. The United States is currently not formally accepting dual citizenship between the US and Sweden, while Sweden formally accepts it, since 2001. Thus, individuals may hold two passports and two citizenships, but they should be aware that the US will not recognize their Swedish citizenship.

Benefits of dual citizenship:

Can work in both countries

Can obtain social benefits / pension from both countries

Can inherit property such as land and houses in both countries

Can live and travel without restrictions in both countries

Drawbacks of dual citizenship:

The Swedish citizenship is not formally recognized by the US; thus
the consulate may not assist if a person is taken into custody

Border patrol may carry out extensive checks

When a student leaves Sweden, he or she may have to pay back the “free” high school or university study fees

Some countries do not permit that a person with dual citizenship receives an
inheritance

Some countries do not recognize marriage, divorce or custody of children when
these were carried out under another country’s law.

It is worth noting that because the US does not accept dual citizenship with regard of Sweden, people with dual citizenship living in the US cannot receive legal assistance from the Consulate of Sweden. People with dual citizenship should bear this in mind. For example, if they have taken action that is lawful in Sweden but does not comply with US
law, they may be challenged upon arrival at the US border or upon arrival at a US airport
passport control. Thus, to avoid problems, people living in the US are advised to make themselves familiar with US laws in all relevant areas, especially with regard of family issues and real estate.

Both Sweden and the US allow ownership of land, homes or buildings for people with dual citizenship.

Because the US does not accept dual citizenship with regard of Sweden, it makes sense to show only the US passport when traveling into or out of the US.

Education in Sweden

Swedish citizens living in the US may obtain free education at Swedish universities.If you are not Swedish citizien but have adequate connections to Swedenit is some possibilities to obtain free education as well.

Inheritance

Laws regarding inheritance vary widely between countries.
Some countries do not allow inheritance of land to foreign citizens. However,
in regard to the relationship between the US and Sweden, there is no restriction for
inheritance of land and assets.

In the year 2012, the amount that can be inherited without taxation is $5,120,000. For the year 2011, the amount was $5,000,000.

Washington State does not impose tax on inheritance, however, federal law does. In 2011, IRS passed a law stating that inheritance will be taxed at 35% of the net income through inheritance, that is, the net amount after costs have been deducted. The value of the inheritance is calculated according to current values on the market. Deductions include loans and other debts and administration costs such as advice from lawyers. The taxation is administered by IRS.

Exceptions are made for donations to non-profit projects and for surviving spouses.

Tax declaration

People living in the US who are US citizens, resident aliens, or hold dual citizenship are required by the US tax office, IRS, to declare assets and income from assets or investments in both countries. Individuals who have assets and / or investments outside the US might need to use form 8938.

Individuals are required to submit form 8938 when they are:

US citizen

Resident alien

Non-resident elect to be treated as resident

Bona fide resident

and

Assets abroad

Are above $50,000 for a single person

Are above $100,000 for a couple

Are invested in financial institutions that are not American

Are owned by an individual – so far these regulations do not include companies

Individuals are advised to continually check for updates, exceptions or additional clauses to these regulations.

When Swedish citizens living in the US, who hold US citizenship or green card, elect to return to Sweden, they will be required to continue filing a tax return in the US for a number of years, if they lived more than 7 years in the US. Thunström said there are cases where people are asked to continue filing a tax return for a considerable number of years after having left the US. Thus, she strongly advises anyone planning to leave the US and move to Sweden to contact a US tax advisor, before leaving, who can assist the person in preparing a final, full report. Normal procedure is to declare all assets and income, from both countries and any other country, before leaving the US.
Thunström emphasized that people who moved from the US to Sweden are advised to continue filing a US tax return for a number of years, to avoid a situation where they get in
trouble when they try to cross the border to re-enter the US.

Retirement in Sweden

When Swedish citizens living abroad reach retirement age, they often choose to return to Sweden. They must then declare assets still remaining in the US to both US and Swedish tax authorities.